Medium Term Business Plan 2025
Complete Realization of Vision for 2025

Briefing for the medium term business plan
May 30, 2023
*May 13, 2024
Page 10: Revised the amount of share buybacks
Revised target for reduction of strategic shareholdings*February 9, 2024
Page 10: Added target for reduction of strategic shareholdings
TSE Prime Market
Securities code: 5715

1

Index
Review of Medium Term Business Policy 2022
(1) Review of Performance Indicators(2) Performance Highlight

Theme & Positioning of Medium Term Business Plan
(4) Promote Cost of Capital and Stock Price
Conscious Management(1) Management Philosophy of the Furukawa Company Group(2) The Value Creation Process of the Furukawa Company Group(5) Growth Strategy(3) Complete Realization of Vision for 2025

Earning Plan / Capital Policy(1) Summary of Earnings plan / Capital policy(2) Review of Business Portfolio(3) Earnings Plan

Strategies and Key Priorities Issues by Segment(1) Machinery Industrial Machinery / Rock Drill Machinery / UNIC Machinery(2) Materials Electronics / Chemicals / Metals(3) Real estate business

Sustainability / Allocation of Management Resources(1) Sustainability Initiatives(2) Allocation of Management Resources, etc.
21(1) Review of Performance Indicators-

Established a robust earnings foundation with the Machinery business as the core business
Performance recovered to pre-COVID-19 levels despite previous deterioration due to the pandemic【Billion Yen】
10.0

Medium Term Management Plan 2019

Medium Term Business Policy 2022

Failed to reach FY2019 ROE target (6–7%), ending theperiod at 5.8%, but achieved FY2019 operating profit
target (¥8.5 billion) in two consecutive years: FY2018(¥8.9 billion) and FY2019 (¥8.6 billion)

Numerical targets for performance indicators have notbeen announced due to the COVID-19 pandemics. In
FY2022, performance recovered to its pre-COVID-19
level (operating profit: ¥9.0 billion,ROE6.2%)

10.0%*We recorded extraordinary profit in FY2020.

8.9

9.0

8.6

9.5%
9.0%
8.5%

7.8

8.0

9.0

8.9%*

7.7
8.0%

7.0

7.5%

6.5

6.9%
7.0%

6.0

5.9%

5.9%

5.0

5.8%

6.2%

5.5

5.7%

6.5%
6.0%
5.5%

4.0

FY2016FY2017Fy2018FY2019FY2020

FY2021

FY2022

Operating profit

6.5

7.8

8.9

8.6

5.5

7.7

9.0

ROE

5.9%

5.9%

5.7%

5.8%

8.9%

6.9%

6.2%

General note: In this document, we describe “FY202x” as the year starting April 1, 202x, and ending March 31 in the following year.

5.0%

3

1

(2) Performance Highlight- Rock Drill Machinery segment strengthened and rebuilt its overseas marketing capabilities and achieved a V-shaped recovery in earnings as a result- In the Metals segment, terminated our entrusted copper smelting contract with Onahama Smelting and Refining Co., Ltd. Proceed with the radical
reform of the entrusted smelting business
Operating profit (Unit: Million yen)Compared to results for FY2016, FY2019, FY2022

FY2016FY2016

ROA(Operating Profit), Total Asset Turnover, Operating margin, Operating profit

FY2022

Metals

FY2022

1,738

301

1,276

Industrial

104

3,208

1,515

Electronics

17

(-)35

500

Rock Drill

897

142

3,030

Chemicals

114

510

532

2,578

3,992

1,547

Consolidated

6,545

8,693

9,031

UNIC
15.0%

FY2019FY2019UNIC

Bubble size: Operating profit

Industrial
machinery

Consolidated
10.0%

13.0%

FY2019FY2019Operating margin

11.0%

Operating margin

FY2016

Chemicals

9.0%

FY2019

Electronics

Rock
Drill

FY2022

FY20227.0%

FY2022

FY20225.0%

FY2022FY20160.0%

FY20225.0%

FY2019

0.4

0.6

0.8

1.0

1.2

Total asset turnover

Metals
FY20163.0%

FY2016FY2016FY2022FY20191.0%

FY2016

0.0
-1.0%

0.3

0.3

0.5

0.7

FY2019FY2019

2016

0.9

1.1

Total asset turnover

1.3
2.5

2.7
1.5

2.9
1.7

3.1
1.9

4

2

(1) Management Philosophy of the Furukawa Company Group
Vision for 2025

FURUKAWA Power & Passion 150
Management
Philosophy

The Furukawa Company Group will remain
indispensable to society by always embracing a
spirit of challenge, advancing the technologies
that have underpinned the foundation of societythat originated in mining development.

Long term business plan and strategies
Action Plan Business strategy
 Financial strategy
 Business portfolio strategy

 Materiality (Key Issues) on
sustainability initiatives

Vision for 2025

FURUKAWAPower & Passion 150

Medium term business plan and strategies

PDCA

Action Plan Management Strategy Meeting(Rolling forward the medium term plan) R&D / Commercialization Committee

Ac t i o n g u i d e l i n e sInnovation Creativity Harmony

 Sustainability Promotion Meeting

Budgeting / planning for each fiscal year

PDCA

Action Plan

Management Strategy
MeetingManagement Committee

R&D / Commercialization

 Sustainability Promotion Meeting

Committee

52(2) The value creation process of the Furukawa Company GroupThe Furukawa Company Group will remain indispensable to society by always embracing a spirit of challenge,
advancing the technologies that have underpinned the foundation of society that originated in mining development.

Management
Philosophy

Mining technologies
Strategy
Vision for 2025
Medium-TermBusiness Plan

Smelting technologies
Products /Technologies /Services

Drilling
technologies

Hydraulic control
technologies

Slurry transportation
technologies

UNIC MachineryRock Drill Machinery

ROE
ROA

Transport / Mineral processing
technologies

Exploitation technologies

Grinding
technologies

Exhaust gas
treatment
technologies

Industrial Machinery

Flash smelting
technologies

Sulfuric acidproduction
technologies

Electric
technologies

MetalsChemicalsElectronics
Category leadershipand uniqueness

Manufacture and sale ofhydraulic breakers, hydrauliccrushers, hydraulic crawler
drills, tunnel construction andmining machinery, etc.

Manufacture and sale of pumps,

Manufacture and sale of UNIC
crushers, and other material machinery,cranes, mini-crawler cranes,
bridges, belt conveyors and heat- andocean cranes, UNIC carriers, etc. abrasion-resistant castings; various

Sale of electrolytic
copper, electrolytic gold,
electrolytic silver, sulfuric
acid, etc. (producedby smelting on
consignment)

Manufacture and sale ofhigh-purity metallic
arsenide, crystal products,
core coils, aluminum
nitride, opticalcomponents, etc.

construction contracts

MachineryBusiness

CSR
ESG

Manufacture and sale ofsulfuric acid, polyferricsulfate aqueous solution,
sulfate band, cuprous
oxide, cupric oxide, etc.

Materials
Business“Corporate Value” Creation through Business Activities“ M a r k e t i n g - B a s e d

M a n a g e m e n t ”

Social Value Creation
Business
Portfolio
Management

That

Incorporates

CSV*

Perspectives-

Establish social
infrastructure
Realize a prosperous societythat is safe andenvironmentally friendly

Enterprise
Risk
Management

Social Issues /Needs*CSV… For the Furukawa Company Group, creating shared value (CSV) means creating “corporate value” by providing infrastructure, products, technologies, services, and the like that help resolve social issues.
It also means fostering the creation of “social value” by improving social infrastructure and realizing a safe, environmentally friendly, and prosperous society.

62(3) Complete Realization of Vision for 2025
Vision for 2025(Ideal image for 150th anniversary of our founding)*

Become a corporate group that leverages its
reputation for category leadership and uniqueness todeliver growth- Leverage our unrivalled, distinctive technological capabilities to deliver growth in areas where we candemonstrate our Group strengths- Differentiate ourselves by practicing “marketing-based management” that incorporates CSV perspectives- Maintain and enhance our earnings base
- Increase our value as a company needed by society*Established November, 2015

Creation of “corporate value”
and “social value”

Targeting consolidated
annual operating profit
regularly in excess of¥15 billion *Phase 3Phase 2Phase

FY2017-2019

Complete Realization of
Vision for 2025

FY2020-2022

Expedite growth and further
improve profitability

Build foundations for renewed
growth

FY 2023-2025

Medium-Term Business Plan 2025

Medium-Term Business Policy 2022
Assumption

Medium-Term Business Plan 2019

FY2022 results

FY2019 results

Operating Profit

Operating Profit ¥8.6 billion
ROE
5.8%

ROE

¥9.0 billion
6.2%* As disclosed in “Consolidated Financial Results for the
Fiscal Year Ended March 31, 2023”

PERFORMANCE
INDICATORs

2019

Operating profit

Approx. ¥13 billion

ROE

Approx. 8%* Performance indicators in Medium-Term Business Plan 2025
do not account for new alliances and M&As

2022

2025
7

2

(4) Promote Cost of Capital and Stock Price Conscious Management-

Swiftly achieve a PBR of 1x or higher by delivering sustainable growth and medium to long term enhancement of corporate value
Take concrete measures to achieve ROE of approximately 8% and diminish the cost of capital
Appropriately disclose information and pursuing active dialogue with investors

Specific initiatives to expand and to strengthen our corporate value creation power:
Achieving ROE of approx. 8%

Transition of ROE
15.9- Achieve consolidated operating profit of approx. ¥13 billion in FY2025- Improve capital efficiency- Reduce strategic shareholdings- Streamline and optimize equity capital- Shareholder return

7.6
6.2

Diminishing cost of capital

8.9
7.5
5.9

Approx.8％
5.9 5.7

6.9
5.8

6.2

- Appropriately disclose effective information related to reduce nonfinancial risks and emphasize active dialogue with investors- Pursue initiatives for sustainability- Invest in non-financial capital(R&D, intellectual property, human capital, DX)- Reduce financial risks- Pursue optimal capital structure with rating strategy at the core

-3.6
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

2025

8

2

(5) Growth Strategy
 Concentrate management resources on Machinery business to increase returns
Practice “marketing-based management” that incorporates CSV perspectives

Basic policies- Establish social infrastructure

Machinery business,positioned as thecore business

Develop infrastructure that helps address social issues in such areas as preventing andmitigating disasters, which are increasing due to climate change- Realizing a prosperous society that is safe and environmentally friendly

Provide products, technologies, services, and other solutions to ensure safe and secure
workplaces for workers and help resolve labor shortages.

Industrial Machinery segment

Rock Drill Machinery segment

UNIC Machinery segment

Increase sales of pumps, material
machinery, belt conveyors, equipment forlarge-scale domestic infrastructure projects

Build an “FRD model” to achievecustomer success throughout
the product life cycle

Expand earnings throughoverseas sales while securing
stable earnings in Japan

Fostering thecreation of“social value”

Devote 70% of cumulative capital investment to the Machinery business, with the aim of thatbusiness accounting for 50% or more of consolidated net sales and 80% or more of
consolidated operating profit
Step up efforts related alliances and M&As to achieve
discontinuous future growth93(1) Summary of Earnings plan / Capital policy*Added/Revised blue underlines- Make individual investment decisions with attention to profitability, taking into account risks associated with the investment and cost of capital,
while stepping up efforts to improve efficiency and profitability- Seeking to establish a robust financial base enabling us to raise the necessary funds regardless of financial conditions- Expansion of shareholder returns (consider increasing annual dividends and paying interim dividends, share buybacks)

Financial strategy
Shareholder return

Operating Profit Approx. ¥13 billion
ROE Approx. 8%-

Pursue optimal capital structure with rating strategy at its core
Raise ratings to A- or higher, from BBB+

Debt-to-equity ratio: 0.5x range
Interest-bearing debt/EBITDA ratio: 3x range-

Annual dividends of ¥50.00 per share or higher, consider increasing annual dividends
and paying interim dividends
Share buybacks (approx. ¥1 billion -> approx.¥1.5 to 2 billion each fiscal year)
Increase from approx. ¥3 billion to approx. ¥5 billion in total for three years

Consolidated total return on equity of 3% or higher

Conduct annual reviews of appropriateness of continued ownership based oncomprehensive judgment of cost of capital and other factors
Continue disclose the ratio of strategic shareholdings to consolidated net assets

Strategic shareholdings ratio 35.1% (FY2022)
Reduction target: Less than 20％ at end of FY2024--

Reducing strategic
shareholdings-

Transition ofoperating Profit /ROE
BillionBy deploying a business portfolio management system that utilizes cost of capital, toachieve sustainable growth and increase corporate value over the medium to long terms-

Earnings plan

Operating Profit

Transition of Debt-to-equity ratio /Interest-bearing debt/EBITDA ratio

ROE

14

13.0

20.0 %

15.9

12

15.0
10

8.9

8.9
7.9

8

6.2

6

6.8
7.6

7.8

3.3

8.9

7.7

10.0

5.5

7.5

5.9

5.7

5.8

8
6.9

6.2

Times

5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0

15.7

15.0

12.6

12.0

0.0
-3.6

FY 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

-5.0
2025

7.9
6.8

5.0
6.0

2.1

Debt-to-equity ratio

18.0

9.0

2
0

Interest-bearing debt/EBITDA ratio

Magnification

6.5
5.9

4

9

8.6

- Underlying assumption of
exchange rate: ¥135/$

3.0
0.0

1.9

1.6

1.4

6.8

7.6

7.4
6.6

5.9

5.7

5.6

4.8
3.0

1.2

1.1

0.9

0.9

0.9

0.9 0.8

0.7

0.6

FY 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 列10.5
列2 2025103(2) Review of Business Portfolio
Basic strategy
for investment-

Diversify visualize and identify our business portfolio, and make rational businessdecisions that are not overly influenced by history-

Plot three factors—”corporate value creation power* ” , “compound annual growth rate (CAGR)”, “Corporate value created/year* ” foreach segment on a bubble chart to accurately visualize our business portfolio-

Conduct a four-quadrant analysis based on growth potential and corporate value creation power* “Corporate value creation power” and “Corporate value created/year” are terms coined by Furukawa Co., Ltd.

Status of review
Conducted a fundamental review of our entrusted
Materials copper smelting business[Business Portfolio Analysis]
Bubble size: Corporate value created/year* (= Corporate value creation power x Invested capital)

Metal segment

0%

Rock Drill segment- Liquidating our overseas subsidiaries in Panama and China

Real Estate business

Solidifying earnings foundation- Use site of former Furukawa Osaka Building to promote lease business

Growth potential

Strengthen and rebuild our overseas marketing

Machinery capabilities

Compound average growth rate(CAGR)- Terminated our entrusted copper smelting contract with Onahama
Smelting and Refining Co., Ltd. on March 31, 2023
- Furukawa Metals & Resources Co., Ltd., transferred all its shares in
Onahama Smelting and Refining to Mitsubishi Materials Corporation

Selective investments

Priority investments

Next-generation
businesses

Growth businesses
X%

Rebuilding
Business
restructuring

Withdraw/
sell-off

Stable profit

Core businesses

Corporate value creation power*
Corporate value creation power* (=ROIC - WACC)

113(3) Earnings Plan-

Make individual investment decisions with attention to profitability, taking into account risks associated with the investment andcost of capital
Stepping up efforts to improve efficiency and profitability
Optimize overall allocation of management resources to achieve sustainable growth and increase corporate value over the medium
to long terms by deploying a business portfolio management system that utilizes cost of capital
Medium-TermBusiness Plan 2019

Medium-TermBusiness Policy 2022

【Billion】14.0

Medium-TermBusiness Plan 2025

8％

5.9%

5.8%

6.2%

7.0%

FY2016

6.0%

5.9%

5.0%

13.0

6.0

8.6

4.0

Results

8.0

4.0%

FY20195.8%
FY2022

6.2%

3.0%

9.0

6.5

Efficiency

Leverage

Total asset
turnoverFinancialleverage

2.84%

0.74 times

2.80 times

2.68%

0.78 times

2.76 times

2.90%

0.93 times

2.31 times

Improve

Improve

2.0%
1.0%

0.0

FY2016 results

FY2019 results

FY2022 results

6.5 Billion
5.9%

8.6 Billion
5.8%

9.0 Billion
6.2%* As disclosed in “Consolidated
Financial Results for the
Fiscal Year Ended March 31, 2023”

FY2025assumption
Approx.13.0 Billion
Approx. 8%* Performance indicators in MediumTerm Business Plan 2025 do notaccount for new alliances and M&As

0.0%

Assumption

2.0

Operating Profit
ROE

Profitability
Return on sales

8.0%

12.0

10.0

9.0%

ROE

FY2025

Approx.

8%

down*Compared to FY2016*Underlying assumption
FY2022 Results: Exchange rate (¥/USD) 135.5
FY2025 assumption: Exchange rate (¥/USD) 135.0

123(3) Earnings Plan-

Consolidated performance (FY2025 image):
Although the compound average growth rate for net sales is expected to decline due to falling sales in the Metals segment,
increased sales and profit in the Machinery business is projected to drive up the operating margin
Bubble size: Operating Profit
Operatingmargin18.0%

Consolidated
FY2022 Results

Machinery
13.0%

compound average growth rate

8.0%

FY2022 results

FY2025 image

4.2%
6.9%
7.5%
10.6%
1.8%
2.3%
40.6%
30.0%

FY2022 results
FY2025 image

Machinerybusiness

FY2022 results

Materials
business

FU2022 results

Real estatebusiness

FY2022 results

Compound average Operating Profit
growth rate
(million yen)

FY2025 image
FY2025 image

FY2025 image

9.0%
-3.6%
-0.4%
7.6%
16.9%
-13.1%
-4.8%
-0.0%

9,031
13,000
6,093
10,700
2,309
1,900
835
600

Sales
(million yen)

214,190
189,000
81,658100,500
126,804
82,000
2,056
2,000

3.0%

FY2025 image
0.0%
-2.0%

5.0%

FY2022
results

10.0%

15.0%

25.0%
20.0%

30.0%

25.0%

35.0%

【2025イメージ】不動産事業,
Operating margin
40.0%
30.0%
35.0%
40.0%
30.0%,
0.0%, 600

Real estatebusiness-7.0%

FY2025 image
FY2022 results
Consolidated-12.0%FY2025 image-17.0%

Materials

133(3) Earnings Plan-

In the core Machinery business, we expect the Industrial Machinery and UNIC Machinery segments to post increases in growth rate, operating
profit, and operating margin
In the Rock Drill Machinery segment, we will maintain high profitability and post increases in operating profit and operating margin despitea declining growth rate
In the Materials business, we expect the Electronics and Chemicals segments to post increases in operating profit and operating margin
Bubble size: Operating Profit
20.0%

UNIC

Electronics

FY2022 results

Industrial
Machinery

15.0%

compound average growth rate

Chemicals

FY2025 image

FY2022 results

FY2022 results

10.0%

FY2022 results

FY2025 image

5.0%

FY2025 image
FY2025 image

0.0%

-1.0%

1.0%

3.0%

5.0%

7.0%

FY2025 image
9.0%

11.0%

13.0%

15.0%

-5.0%

Rock Drill
FY2022 results-10.0%

Metals

FY2022 results-15.0%FY2025 image

Operating margin-20.0%

compoundOperatingOperating Profit
Sales
average growthmargin(million yen)(million yen)ratecompoundOperatingOperating Profit
Sales
average growthmargin(million yen)(million yen)rate
Industrial
Machinery

Rock Drill
UNIC

FY2022 results
FY2025 image
FY2022 results
FY2025 image
FU2022 results
FY2025 image

8.4％

-8.3％

1,515

17,943

12.5％

10.7％

3,000

24,000

8.5％

8.9％

3,030

35,752

9.5％

3.7％

3,700

39,000

5.5％

-4.2％

1,547

27,961

10.7％

10.4％

4,000

37,500

MetalsElectronics
Chemicals

FY2022 results
FY2025 image
FY2022 results
FY2025 image
FU2022 results
FY2025 image

1.1％

18.4％

1,276

111,4240.8％-16.7％

500

63,500

7.2％

7.9％

500

6,926

7.8％

9.3％

700

9,000

6.3％

8.0％

532

8,454

7.4％

4.2％

700

9,500

14

3

(3) Earnings Plan
- Composition ratio of operating profit: Ratio of the core Machinery business is forecast to increase from 66% (¥6.0 billion)
in FY2022 (final year of Phase 2) to 81% (¥10.7 billion) in FY2025- Operating profit is forecast to approximately double for the Group as a whole and triple for the Machinery businesscompared with FY2016 (base year)

Comparison of operating profit composition ratios

Note: “Composition ratio” refers to the percentage of the total after deducting others and adjustments.

Results

FY2025 Image(Medium Term Business Plan 2025)

FY2016

Real Estate

FY20225%Compared to medium termbusiness plan 2025 image
Operating profit

Real Estate

Compared to medium
term business policy 2022
Operating profit

Real state

19%

Materials
business

28%

1.4 times

Operatingprofit¥6.5 billion

Machinerybusiness

53%

9%

Materials
business25%¥3.5billion

1.4 times

Operatingprofit¥9.0 billion

Machinery business66%¥6.0billion

Compared to medium termbusiness plan 2025 image
Operating profit

Approx. 2 times

Materials
business

14%

OperatingprofitApprox.
13billion

Machinery business81%¥10.7billion
154(1) Machinery

Basic strategy
for investment

Industrial Machinery- Further strengthen our engineering capabilities and promote
cross-departmental initiatives and DX to move away frombeing a standalone equipment manufacturer- Build a business foundation in the domestic market bypursuing the United Nations Sustainable Development Goals(SDGs) and working on infrastructure development projects
that help resolve social issues (such as disasterprevention/mitigation)

Key priorities--

Generate demand and promote sales of SICON®
enclosed hanging conveyors

SICON® Enclosed Hanging
Conveyor* Comparison of FY2021 resultsand FY2025 image

Pumps

Belt Conveyor

Increasing profit due to growth and improved
profitability

Improving growth and higher profit despite flat
profitability

Material Machinery

steel structures and Pump equipment

Improving profitability and higher profit despite
lower growth

Increasing growth and higher profit (stemming fromincreased sales) despite declining profitability

Ｙ：

Growth Potential-

Crushers

Industrial Machinery: Business (product) portfolio

Strengthen product competitiveness and promote
proposal-based sales to win orders for section plant
construction projects (pumps, material machinery)
Establish earnings base through stock businesses(pumps, material machinery), including by utilizing
customer information management to enhance services

Slurry Pumps (LK3)

Belt Conveyor

Material Machinery

Pumps

Pump
equipment

Steelstructures

X：Profitability

16

4

Industrial Machinery(1) Machinery

Pumps
Market-Demand for renewal of aging facilities

environment-

Improving energy efficiency and longer service life

Slurry pumps- Targeting the nonferrous and chemicals
industries (where we anticipate solid stockbusiness earnings), we will introduce a
strategic machine (new, high-efficiency slurrypump (LK3)), aiming to replace othercompanies’ pumps

Mainmeasures- Strengthen our sales structure in Chugoku andShikoku regions

Pump equipment

Material machinery-

Demand for renewal of aging facilities

Contribute to customers’ energy savings
through higher efficiency and lower runningcosts due to longer service life-

Increasing trend in construction for national land
resilience, disaster prevention/mitigation
measures, etc.

-

Growing awareness of belt conveyors as analternative to dump trucks for transporting earthand sand, resulting in increased inquiries

West Japan

Belt conveyors- Leverage our strategic machines (new screens,crushers (GEOPUS C3 and HPGR)) to tap newmarkets; expand market share and increase
stock by encouraging customers to replace
other companies’ equipment with ours

- Win orders for currently planned projects(new/renewal dam construction, river flood
control, tunnel construction, etc.) and solicit
increased inquiries

Utilize IoT technology- Utilize IoT technology to formulate sales
proposals for section plants aimed at
productivity improvement and rationalization,and promote servitization (kotozukuri)- Further penetrate East Japan (where we havea good track record) and expand market sharein West Japan

Expectedoutcomes

Infrastructure business

Improved productivity of customers’
operations and more stable and reliable
operation of customers’ production
facilities- Emphasize features of SICON® (enclosed
hanging conveyors) as a problem-solving
method of transporting earth and sand; aim fordomestic procurement and production of parts

Steel structures- Stabilize business profit by attracting firm
orders for steel bridges and increasing salesof steel segments

Safe and environmentally friendly method
for transporting earth and sand174(1) Machinery

Basic strategy
for investment-

Rock Drill Machinery

Build an “FRD model” to achieve customer
success throughout the product life cycle

Key priorities- Establish FRD model in Japan
Strengthen Life Cycle Support businessHydraulic breakers- Strengthen sales of parts and consumables- Commercialize support program for blast hole drills*- Establish trade-in resale business (tunnel drill jumbos, hydrauliccrawler drills)

Hydraulic crawler drills

Rock Drill Machinery: Business (product) portfolio

Increase in profit due to higher growth and profitability

Maintenance services
Profit to remain mostly unchanged despite sluggish growth and profitability- Emphasize centralized sales and production

Production: Reduce costs through centralized production, enhance quality(to minimize complaints), and shorten lead times

Blast hole drills

小型

Ｙ
：

Growth Potential

Japan: Strengthen sales in the quarry market and deepen our presence inthe demolition equipment market through concentrated sales ofsmall hydraulic crushers and concentrated rollout of demolition
equipment in the Tokyo Metropolitan Area

* Comparison of FY2021 resultsand FY2025 image

Blast hole drills, hydraulic breakers, hydraulic crushers, tunnel drill jumbos,
auxiliary parts*Blast hole drills:
General term for hydraulic/pneumatic crawler drills, down-the-hole drills, andattachment drills

Overseas: Cultivate North American market for large blast hole drills andstep up development of attachment drills as frontline machines fordeveloping the Southeast Asian quarry market (hydraulic machinery)

Tunnel drill jumbos

Hydraulicbreakers

Auxiliaryparts

Tunnel drill
jumbosHydrauliccrushers

Maintenanceservices

X：Profitability

184(1) MachineryRock Drill Machinery

Marketenvironment-

Shortage of operators due to declining birth rate andaging population-

North America: Stimulus measures and infrastructure
investments have led to strong demand for wide-area
rentals-

Demolition machine market: Increasing need forlarge-sized, high-impact equipment-

Tunnel projects: Strong demand for automatedconstruction as a safety measure

Europe: Prolonged invasion of Ukraine and inflation willslow growth, but urban development projects will continue
to drive rental demand--

Hydraulic crawler drills-

Semi-automatic drilling function added

Hydraulic breakers, hydraulic crushers

Mainmeasures-

Japan: Shortage of skilled workers has led to anincrease in demand for services to improve theskills of workers-

Demand for parts in regions where the Company’s
machines are operating

Southeast Asia: Demand expected to shift from pneumatic
to hydraulic machines as GDP grows in each nation

Deeply penetrate market for large machines,
which accounts for around 80% of North
American market-

Concentrate on selling large blast hole drills
Establish base in western region to strengthen sales to explosive
crusher contactors

Establish FRD model in Japan
Strengthen sales of parts-

Review pricing of parts-

Review overseas distributorship agreements-

Improve sales skills in stock business-

Cultivate the demolition equipment market in Tokyo
Metropolitan Area (step up sales of large and super-large
breakers)-

Tap the breaker market in Europe

Strengthen maintenance service business-

Concentrate on sales of small hydraulic crushers (for roadgeneral contractors and aggregate recycling)--

Reconsider maintenance system for hydraulic breakers
and hydraulic crushers-

Reinforce preventive maintenance services for hydrauliccrawler drills and propose maintenance services for
specific purposes

Tunnel-related products-

Step up sales of autonomous and labor-saving products(fully automatic drill jumbos, rock bolting machine(BOLTINGER), concrete spraying machines with erectors,
etc.)

Achieve highly efficient and safe operation
through automation and mechanization

Increase market share in the four countries driving European
market (France, United Kingdom, Italy, and Germany) bystrengthening and expanding our network of dealers for rental
equipment

Develop the Southeast Asian quarry market--

Expectedoutcomes

Life Cycle Support (LCS)

Overseas

Japan

Highlight the superiority of Furukawa-brand drifters by promoting
attachment drills as frontline machines (Indonesia, Cambodia,etc.)
Launch small and medium-sized hydraulic crawler drills (currently
under development) targeting Southeast Asian market (2025)

Promote shift to hydraulic machines in theSoutheast Asian quarry market

Develop business model (for customer success)-Hydraulic crawler drills: Leverage operational support
systems to commercialize support programs (intangible
services, subscription services)

Ensure customer success by providing
technologies and other solutions

194(1) Machinery

Basic strategy
for investment

UNIC Machinery- Securing stable earnings from domestic sales
and expanding earnings from overseas sales
Japan: Enhance competitiveness by increasing
product functionality and added value andimproving service systems
Overseas: Strengthening product, sales, andservice technology capabilities
UNIC craneMini-crawler cranes

UNIC Machinery: Business (product) portfolio

Key priorities- Japan: Strengthen competitiveness by increasing thefunctionality and added value of UNIC cranes and UNIC
carriers and expand sales of mini-crawler cranes and ocean
cranes (cranes for ships), which do not depend on trucks- Overseas: Develop mounted cranes (large models) and newmini-crawler cranes, expand sales network, and strengthen
sales capabilities of dealers- Promote further automation, quality improvement, and cost
reductions at the Sakura Works

Growth Potential- Reinforce product development system and promote R&D toaddress the electrification of trucks

Ｙ：

UNIC carriers* Comparison of FY2021 resultsand FY2025 image

UNIC cranes (Japan and overseas)

Mini-crawler cranes(Japan and overseas)

Japan: Increase in growth and higher profit(stemming from increased sales) despite
declining profitability
Overseas: Increase in profit due to higher
growth and profitability

Increase in profit due to higher growth and profitability bothin Japan and overseas

UNIC
carriers

UNIC carriers
Increase in profit due to higher growth and profitability

Mini-crawler
crane(Overseas)

Mini-crawler cranes(Japan)UNIC crane(Japan)UNIC crane(Overseas)- Strengthen our service system
X：Profitability

204(1) Machinery

UNIC Machinery
Japan

Marketenvironment-

Recovery in truck production
Growing interest in decarbonization (adopting electrification trend)
Intensifying price competition between large suppliers
Existence of niche markets (e.g., narrow sites)
Concerns about labor shortages and shrinking market size due todeclining birth rate and aging population

UNIC cranes ,UNIC carriers- Step up direct sales and expand sales of products unique to UNIC
- Adapt to vehicle electrification trend

Mini-crawler cranes
Mainmeasures- Increase sales of high-value-added products (battery-operated models,disassembled models, etc.) for rental market; narrow target customers(electric power companies, general contractors, etc.) to focus on andcultivate new markets

ocean cranes- Reinforce contacts with existing customers and develop new ones

Expectedoutcomes

Ensure safe, efficient, and energy-saving operations
at diverse sites

Overseas-

Increasing demand due to infrastructure development
Growing rental market
Growing demand for labor-saving machinery
Multifunctioning of productUncertain economic conditions (geopolitical risks, inflation, etc.)

Southeast Asia, East Asia, Middle East, Oceania- Increase sales of UNIC cranes (large and super-large machines) anddevelop dealer network

North America- Increase sales of mini-crawler cranes for rental market

Europe- Strengthen dealer salesforce to restore market share

Product development- Expand lineup of large and super-large machines

Build win–win relationships with dealers in eachcountry to improve customer satisfaction
21

4Electronics(2) Materials

Basic strategy
for investment-

Expand business in strategic products
to increase earnings- Growing demand for heat-dissipating materials forsemiconductor manufacturing equipment, etc.
Marketenvironment

Key priorities-

Aluminum nitride ceramics: Increase production
capacity to reinforce sales-

Optical products: Develop and commercialize special
optical material products; increase sales of diffractive
optical elements (DOEs) for laser processing-

High-purity metallic arsenic: Establish stable supply
system that reflects market needs as a category leader-

Coils: Develop products and expand sales in growthareas to bolster earnings- Growing market for high-quality laser processing- Semiconductor market recovering moderately (due toincreased demand for 5G communications, sensors, etc.)
despite deterioration in the short term

Aluminum nitride ceramics- Swiftly commission facilities to achieve 1.6-fold increase inproduction capacity; consider investments for further
production increases; develop distinctive productsMainmeasuresOptical components- DOEs: Aim for mass adoption of laser processing- Consolidate operations to stabilize profitability

High-purity metallic arsenic- Maintain our facilities preventively and ensure stableprocurement of raw materials

Expectedoutcomes
Aluminum nitride ceramics

Laser head equippedwith DOEs

Contribute to enhanced functionality ofelectronic devices, etc.

High-purity metallic arsenic

22

4

Chemicals(2) Materials

Basic strategy
for investment-- Domestic market for chemical products generally
shrinking due to population decline

Increase earnings from existing products andnurture and expand newly developed products
Marketenvironment

Key priorities- Growing demand for batteries and related electronic
components due to shift to EVs and automation of
automobiles, etc.

- Increasing demand for servers, etc., due to advancesin networks stemming from ICT innovation

Existing products- Sulfuric acid: Strengthen differentiation by emphasizing high-quality
sulfuric acid
- Cupric oxide: Capacity enhancement to increase sales

Sulfuric acid

Newly developed products- Strengthen differentiation by emphasizing high-quality
sulfuric acid for battery applications for which demand is
growing- Metallic copper powder: Expand sales channels by developing new
applications
Main
measures

Cupric oxide- Increase production capacity and expand sales to address
rising demand for packaged substrates used in servers, etc.

Metallic copper powder- Shorten the process from sample rollout to formal adoption
and develop applications other than conductive applications(such as multilayer ceramic capacitors (MLCCs)) to expand
sales channels
Cupric oxide

Manufacturing plant ofsulfuric acid

Metallic copper powder

Expectedoutcomes

Help realize an environmentally friendly andprosperous society234(2) Materials

Metals(3) Real estate business
Real estate business

MetalsBasic strategy
for investment-

Basic strategy
for investment

Make efforts to optimize the entrusted
smelting business

Key priorities

Key priorities- Promote lease business using site of former Furukawa Osaka Building- Pursue profitability and stabilization of the entrusted smelting business-Termination of entrusted copper smelting agreement with Onahama Smelting andRefining Co., Ltd. (March 31, 2023)- Strategically reduced scale of operations and drastically cut unprofitable exports- Obtained clear outlook on fundamental review of entrusted smelting business
Metals segment profit
and loss infection

Net sales
Operating profit

FY2022

FY2023(Forecast)-- Partial sale of the Company’s interest in the siteVS FY2022
difference¥111.4 billion¥74.8 billion(-)¥36.6 billion¥1.2 billion¥0.5 billion(-)¥0.7 billion

Sell our interest in the site

Copper output
Assumption
Copper price(¥0.09 billion)
70,186 ton
8,551 $/mt(¥0.5 billion)
48,592 ton
8,000 $/mt(+¥0.41 billion)(-)21,594 ton-

Elevation of the south side
[Condominiums, hotel, restaurants]
Building height

Lease business planned- Plan to use proceeds from the sale to leasea hotel and some residential units scheduled
to be built on the site

Overview of planned building project
Location(Operating profit
exclude price effect)- Stabilize earnings from Muromachi Furukawa Mitsui
Building and effectively utilize other real estateholdings, including site of former Furukawa Osaka
Building

Site area
Site area

2-4-1 Dojimahama, Kita-ku, Osaka City and other land

Approx. 5,755 m2
Approx. 5,755 m2

Main uses

Construction of condominiums, hotel,
restaurants, and offices

No. of floors

40 above grounds; 1 basement level

Scheduled completion May 31, 2027
Note: Information shown in the architectural plan and the elevation isbased on current plans and may be subject to change in the future.

Exchange rate

135.5 yen/$

135.0 yen/$

-

24

5

(1) Sustainability Initiatives

Basic policies- The Furukawa Company Group has positioned efforts toward sustainability as one of its most important management issues. In addition
to contributing to help realize a sustainable society, the Group is committed to achieving sustainable growth and enhancing medium tolong term corporate value by establishing a robust corporate foundation for growth and resolving social issues through its business.

Furukawa Company Group’s Approach to Sustainability

Defensive sustainability

Proactive sustainability
The Group will create corporate value andcontribute to the creation of social value by
developing infrastructure and providing
products, technologies, and services that help
to resolve social issues

Materiality (Key Issues)
CSV issues- Providing environmentally friendly products,
technologies, and services- Contributing to the resolution of customer
issues- Contributing to the creation of a safe andcomfortable society, including infrastructuredevelopment

Sustainable growth and enhancing
medium to long term corporate value

Proactive
aspects

Resolve social issues
through businessContribute to the SDGs through“marketing-based management”
that incorporates CSV perspectives

Maximize opportunities(Improve profitability)

Defensive
aspects

Establish a robust corporate
foundation for growth(expansion and strengthening of
non-financial capital)

Enhance corporate value
by emphasizing businesspractices that reflect CSR
and ESG issues

Reduce risk
(Reduce capital costs)

The Group will strengthen and expand its enterpriserisk management system and enhance corporate
value by emphasizing business practices thatreflect CSR/ESG issues recognized and to besolved by the Group.

Materiality (Key Issues)
CSR/ESG issues

E-

Promotion of climate change countermeasures in ourbusiness activities

Environment -S
SocialG

Promotion of biodiversity preservation activities-

Development of a safe and rewarding work environmentthat takes health into consideration-

Recruitment and development of diverse human resources-

Promotion of management that respects human rights-

Development of an enterprise risk management system

Governance -Strengthen and expand Groupwide risk
management system

Thorough compliance25

5(1) Sustainability Initiatives“Marketing-based management” thatincorporates CSV perspectives

The Group will help achieve the United Nations Sustainable Development Goals (SDGs) by practicing“marketing-based management” that incorporates CSV perspectives and creating “social value” by improvingsocial infrastructure and realizing a safe, environmentally friendly, and prosperous society.

[SDG Contribution Targets by Segment]
Segment

Industrial
Machinery
Rock Drill
Machinery

SDGs with High Contribution Levels ( ◎: Especially Important; 〇: Important)

Main Products, Technologies,
and Services

Pumps

Belt
conveyors

Steelbridgesand steelstructures

Tunnel drill
jumbosHydrauliccrawler
drillsHydrauliccrushers

UNIC
cranesMini-crawler
cranesOcean
cranesUNIC Machinery

MetalsElectronics

◎

◎

○

◎

◎

○

◎

◎

◎

◎

◎

◎

◎

◎

○

◎

○

Electrolytic
copperHigh-purity
metallic
arsenide

Coils

Opticalcomponents(lenses)

Sulfuric acid

Aluminumsulphate

FerroussulfateChemicals

○
○

◎

○

◎

○

◎

26

5

(1) Sustainability Initiatives-

Formulate roadmap toward carbon neutrality and conduct scenario analysis in line with TCFD recommendations aimed ataddressing the CSR/ESG issue of “Promotion of climate change countermeasures in our business activities”-

Promote initiatives to address the CSV issue of “Provision of environmentally friendly products, technologies, and services”-

Enhance disclosure of information related to these initiatives

Addressing decarbonization
CO2 reduction plan-

CO2 reduction measures at each production site

Implement a carbon-neutral declaration-

Work to complete a roadmap by FY2025
Use of electricity derived from renewable energy sources, etc.

External
evaluations

Climate-related disclosure
Express our support for the Task Force on
Climate-related Financial Disclosures (TCFD)
recommendations-

Initiate scenario analyses in the Metals segment and Rock Drill
Machinery segment-

Promote disclosure of relevant information-

Inclusion in SRI/ESG indexes-

Improving our external ESG-related evaluations27

5(2) Allocation of Management Resources

Basic policies- Prioritizing investments to achieve sustainable growth andenhance corporate value over the medium and long terms

Basic policies

Allocation of operating cash flows-

While aiming to establish a robust financial base, wewill make capital investments to enhance corporate
value over the medium to long terms-

Endeavor to allocate operating cash flows in
consideration of shareholder returns- Provide stable and continuous returns to shareholders- Investment come from retained earnings and cash flows- Invest in alliances and M&As through optimal financing(including sale of strategic shareholdings)

Allocation ofoperating cash flows

Support enhanced manufacturing

Cash in

Capital investments

Cash out
Growth investments

Accelerate growth strategies
and business transformation

Help resolve social issues

Invest in DX

Invest in R&D

Ensure competitive advantage

Invest in
intellectual property

Enhance
corporatevalue¥10 billion
Consolidated
operatingcash flows

Create a rewarding company

Invest inhuman capital

3-year cumulative
total images¥40 billion

Capitalinvestments¥20 billion＋
Maintenance and renewal¥10 billion

Dividends¥7 billion
Share buybacks

Achieve discontinuous growth

Invest in alliances and M&As

Decarbonization, environmental impact
reduction, and respect for human rights
in the value chain

Invest insustainability initiatives

Reduction ofinterestbearing debt

¥3 billion¥10 billion
285(2) Allocation of Management Resources

Capital investments

Invest in R&D

Capital investments-

Invest in R&D

Capital investment plan to support enhanced manufacturing
Our capital investments will center on the Machinery business,
which is positioned as our core business-

Promote the commercialization and industrialization ofdevelopment projects that help resolve social issues
Revitalize our on-site capabilities to improve productivity

Capital investments allocation image

Key priorities
Machinery business¥14 billion

Other ¥1 billion-

Develop automation technology aimed at labor savings-

Develop materials and mass production technology for solid
electrolytes used in all-solid-state batteries-

3-yearcumulative total

Develop machinery-related products and technologies thatdeliver higher efficiency and lighter weight and otherwise help
reduce environmental impact-

Effectively utilize DX¥20 billion-

Fully deploy our Engineer HR Development Program to step up
development of engineers who will lead the next generation

Materials business¥5 billion29

5

Investment in
intellectual property(2) Allocation of Management Resources
Investment in intellectual property-

Develop systems that utilize IP information to secure acompetitive advantage-

Effectively operate within the IP landscape*FY2022

Properly assess the value of our entire business, including IP,
based on the technology rights of each operating

Key priorities--

Revitalize IP activities (discovery, acquisition,
maintenance, and utilization of rights) to enable us tovisibly evaluate our technological capabilities
Assess the value of the industrial property rights we holdin order to utilize them effectively
Collect and analyze patent information and formulate
corporate strategies accordingly

FY2023

FY2025

Surveys/Research

Establish projects topromoteUpskill

Foster common
understanding

Start Operation
Top-down*When determining their management and business strategies, companies conduct analyses thatincorporate IP information into their management and business information. The results (overview of
the current situation, future prospects, etc.) are shared with top executive and business managers,
who obtain feedback and hold discussions and consultations for planning and consideration.

Breakdown of Intellectual Property Rights Held (Domestic) by segment
Materials 32%

Machinery 68%
Technology Division(Machinery)

10%

Technology Division(Materials)

Industrial Machinery

29%

Chemicals

1%

Electronics

1%

Furukawa C&F

1%

10%
FY2022590 patentRock Drill Machinery

20%

UNIC Machinery

28%
30

5

(2) Allocation of Management Resources

Investment
in human capital
人的資本への投資
基本戦略
Basic
policies-

Create a rewarding company where all
employees can maximize their abilities andcreate new value

Human resource development policy

Investment in
human capital

Indicators/targets related to HR development policy
Hire diverse human resources

Indicator/target

Ratio of women among new graduates hired forgeneral positions*1

20%

Female manager ratio*2

3%

Ratio of new hires in management/general
positions who are experienced*140%Latest result
13.00%(Applicable period: Join in FY2023)

3.33%(Applicable period: March 31, 2023)

43.75%(Applicable period: Joined in FY2022)

For the Group to resolve social issues through its
business activities and achieve sustainable growthand increase corporate value, it is essential todevelop human resources with a variety of
personalities.

Ratio of employees with subsidiaries*3

Adoption of
statutory
employment rate

(Applicable period: FY2022)

Develop human resources who are willing totake on challenges and act autonomously

Indicator/target

Latest result

Commit to developing a diverse workforce capableof acting autonomously and willing to embrace thechallenge of creating new value.

Training hours per year*1

1,500 hours

Number of trainees per year*1

3,600 persons

2.49%

843.6 hours(Applicable period: FY2022)

2,506 persons(Applicable period: FY2022)*1 Applicable: Company-registered employees*2 Applicable: Consolidated*3 Among consolidated subsidiaries subject to employment ratio system for persons with disabilities315(2) Allocation of Management Resources
In-house environmental improvement policy
The Group is committed to creating comfortable workplaces
where diverse human resources can perform their duties
safely and efficiently while maintaining a rewarding andhealthy work environment

Investment inalliances and M&As

Investment in
human capital

Investment in alliances and M&As
- Consider alliances and M&As with peripheral companies that fill the gaps in ourbusiness and create continuity, as well as with companies that will form the fourthpillar of our core Machinery business

Key priorities Consider and enter alliances and M&As to achieve sustainable expansion
and growth

Indicators/targets related to internal environment improvement policy
Indicator/target
Ratio of male employees taking
childcare leave*

80%

Ratio of employees returning towork after childcare leave*

100%

Ratio of employees receiving
health checkups*

100%

Anomalyobservation
rate*
Recognition as Health andProductivity Management
Organization※

Latest result
72.20%(Applicable period: FY2022)

87.50%(Applicable period: FY2022)

Industrial
Machinery

UNIC

Rock Drill

99.96%(Applicable period: FY2022)

Age 40 and over:Less than 50%(Applicable period: FY2021)

Under age 40:
Less than 30%(Applicable period: FY2021)

Obtain “White 500”
certification

 Pursue synergies in PMI

61.20%

45.40%
×(Year 2023)

Approach to alliances and M&As
Fill the gaps in our businessIndustrial
Machinery

Rock Drill

Fourth pillar of our core companies

UNIC

Industrial
Machinery

Rock Drill

UNIC

Fourthpillar*Applicable: Company-registered employees

325(2) Allocation of Management Resources

Investment in DX

Investment in DX-

Promote DX to support accelerating the Group’s growth strategy and operational reforms that reflects market needs and supports reliable
and attractive manufacturing and value creation

DX Promotion
SystemUtilize digital technology to accelerate sustainable management

Aim

Established the DX Promotion Committee in April 2023 to create a Groupwide DX promotion system.
The committee is responsible for developing and promoting DX strategies on a Groupwide level.

Board ofDirectors-

faced by customers, society, and the Group and help create value- Improve and optimize technologies required to enhance productivity and improve anddevelop products- Improve services and create new business model

Representative
Director-

DX Promotion Committee

Manufacturing
Subcommittee

Servitization
Subcommittee

Engage in manufacturing (monozukuri) and servitization (kotozukuri) to resolve issues

Operational
ReformSubcommittee

Promote operational reforms

Automation
Continuation andadvancement ofinitiatives

Productivity
enhancement

Labor-saving
Efficiency
enhancement

Optimization“Marketing-based management” that incorporates CSV perspectives

Examples of specific initiatives to date-

Development of fully automatic drill jumbo
Automatic adjustment of driller to optimum position
Complete mechanization of dedicated rock bolting machines
Start of DX of carrier manufacturing process
Introduction of sales support tools

Opportunities/risks surrounding our business environment for practicing sustainable management
Pursuit of improved productivity and efficiency

Cost reduction

Safety and security

Frontline labor shortage
Transfer of technology and know-how

Workstyle reforms
Harsh working conditions33

5(2) Allocation of Management Resources

Investment in DX

Cross-organizational DX development and promotion

Manufacturing

Servitization

Use 3D datato achieve overall
optimization of production
processes andimprove productivity

Build business models
and create
revenue streams throughcustomer value creation

Using digitizationand digital tools
for business improvements
and workstyle reforms

Launch Groupwide DX initiatives with view tobuilding smart factories
Utilize 3D data to improve productivity- Target overall optimization of manufacturing
processes from design to production- Aim for streamlined manufacturing- Visualization of know-how of skilled workers andUtilize digital technology to create new
business model
Enhance value-added services-

Operational
reformOperational reform- Analyze machine operating data, provide
technical support and proposals

Make Groupwide business improvements andworkstyle reforms- Expand electronic circulation and workflow- Utilize digital platforms to improve operational
efficiency and advance business

Develop and strengthen DX human resources

Common challenges in DX promotion

Fostering DX human resources
Improving the IT infrastructure

Expected outcomes

Servitization(kotozukuri)

Medium-Term Business Plan 2025: Measures
Manufacturing(monozukuri)

Three Pillars of DX Promotion-

Use external training to develop IT human resources
Improve digital literacy of staff working on DX
Flexibly secure IT personnel from outside- Accelerated product development ⇒ Engineering DX- Improved labor productivity and reduced costs
establishment of technology transfer
Profits generated for customers (through increased
productivity, optimization of maintenance operations,and predictive maintenance) and relationships of trust
reinforced-

New sources of revenue- Streamlined information management and decisionmaking and paperless operations- Efficient sales promotion, service improvement, andvisualization of sales activities-

Effective digital technology use and enhanced business management
capabilities due to improved IT/DX literacy of employees-

Enhanced problem-solving capabilities through reinforcement of inhouse ICT human resources-

Steady promotion of DX through reinforcement of ICT humanresources (who are in short supply)

Infrastructure, security, governance-

Build common information infrastructure for the Group
Prepare for cyberattacks and reinforce information security
Shift to cloud computing and/or environment for basic-operations
systems- Establish information infrastructure indispensablefor promoting DX

34

References ROE Tree for Creating Corporate ValueManagement / Performance Indicators

Breakdown into Strategies and Measures
Be disclosed

In-Group KPI (Performance Indicator [Improvement Driver])
Expand business areas; develop
new businesses and products
Increase sales prices (unit prices)

Gross margin

ROA
Net income
Total assets

Operating margin

ROE
Net income
Net worth

Control sales prices

Reduce defective products

Reorganize operations; sell businesses
Operating income
Reduce labor costs
Net sales

Operating profit

Total asset
turnoverTotal assets

Net sales
Total assets

Automate; save labor
Increase productivity

Unit price (selling price)
Variable cost reduction amount / rate
Defective product amount / rate

Current asset
turnoverRatio of labor costs to net sales
Sales per employee
Operating profit per employee

Reduce R&D expenses

Ratio of R&D expenses to net sales

Reduce sales promotion and advertisingexpenses

Ratio of sales promotion / advertising expenses
to net sales

Increase sales volume

Increase market share

Sales volume; market share

Increase accounts receivable
turnoverShorten accounts receivable collection period

Accounts receivable turnover period(days/months)

Reduce costs;
improve cost-effectiveness

Efficiency

Priority sectors / regions (domestic, overseas,
countries) / new products/strategic products /new businesses

Reduce logistics costs

SG&A expense ratio
Operating profit
is usedinstead of net
income incalculations ofsegment-specifc
ROA.

Develop new businesses; launch new(high-value-added) products

Promote centralized purchasing
Reduce cost-of-sales ratio

Profitability

Expand business areas

KPIs into Frontline Operations(Examples)

Shorten lead times
Increase inventory turnover

Lead time (time for delivery)
Inventory turnover period (days / months)

Reduce inventories
Disposal of slow-moving inventories for a long time

Improve capacity utilization rate
Improve capital investment efficiency

Fixed asset turnover

Tangible fixed asset turnover period(days/months)

Sell idle assets

Total assets
Financial leverage

Net worthInterest-bearing debt ratio
Interest-bearing
debt / EBITDA
Interest coverage ratio

Increase cash dividends

Increase shareholder returns

Share repurchase and retirement
Increase interest-bearing debt

Total shareholder return ration/a (no set KPI)

35

Cautionary Notes Regarding Forward-Looking Statements
This document contains forward-looking statements including forecasts, expectations, assumptions, plans, acknowledgements and evaluations
regarding the Company and the Group. These statements are based on the information the Company has obtained as of the publication dateand on assumptions the Company believes are reasonable. The forward-looking statements in this document and their implications may differ
materially from actual results because the assumptions of the Company and the conclusions that it has reached are subjective in nature and thebusiness environment and business activities are subject to latent risks and uncertainties. Latent risks and uncertainties that may affect theCompany’s forward-looking statements are explained in, but not limited to, the Company’s Annual Securities Reports and the “Business Risks”
section of the Company’s corporate website.
Therefore, the Company does not promise or warrant the attainment of performance indicators, forecasts, or future operating results describedherein. Furthermore, the Company does not undertake any obligation to update any statements in this document after its publication,
irrespective of new information, future events or otherwise.
You are cautioned to use this document at your own discretion. The Company is not obliged to warrant the reliance, accuracy, integrity,
completeness, or timeliness of the information herein, or to bear responsibility for any damages arising as a result of using this document.
This document has been prepared solely for information purposes, for better understanding of the Company’s business policies andmanagement operations. This document is not a solicitation of investment in securities. Accordingly, you are cautioned not to place undue
reliance on this document when you make an investment decision. The Company does not bear any responsibility for your decision regarding
your investments.

36